Pricing Strategies and Promotional Mix

- What is the importance and effectiveness of various pricing strategies?

- What is the importance and effectiveness of distribution channel options?

- Consider an IT company which deals in developing spftware application products for the telecommunications sector. What could be an element of promotional mix which is used least? How could this element be increased to enable a more effective promotional mix? What would you recommend and why?

Solution Preview

Prices should reflect the value that consumers are willing to pay.

In the market, there are many different options available to consumers - from low end products to high end designer one.

If you walk into a grocery store, you can see an entire row of water bottles. Some are marked with store brands, while others are designers ones (i.e. - No name vs. Evian). This is normal and much expected since there are different types of consumers. Some consumers want the cheapest price - and they will buy the NO name products for a utilitarian reason - to quench their thirst. However, there are other consumers that are all about the perceived quality of the product - they will be more then happy to spend 2.00 on an Evian bottle of water for a few reason. Firstly, they can trust the name (the brand name is synonymous with quality). Secondly, they like to show off that they bought the brand name - it might impress people. Finally, they might not trust the quality of a lesser product.

This is as true for water as it would be for running shoes - Wal-Mart brand Vs. Nike.

As for the concert tickets, the $500 one must be the deluxe package - perhaps a private room with food and drinks... most probably anyone can buy a "nose bleeder" ticket far away for as little as 80$.

With distribution channels, you want to make sure that you pick the most economical channel that ...